Stocks added to losses on Wednesday after the Federal Reserve said the economic outlook remains grim, even as it said it would take more action to boost demand.
The Fed, as expected, said it would buy more long-term Treasury securities in an effort to lower rates. At the same time, though, the monetary policy committee noted that there are significant downside risks to the economic outlook, spooking investors.
That headline of economic outlook -- I don't know why people are surprised to read that -- but it seems to be what people are fixated on, and that is what is driving the market lower, said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
In an effort to put more downward pressure on long-term interest rates and help the battered housing sector, the Fed said it would launch a new $400 billion program that will tilt its $2.85 trillion balance sheet more heavily to longer-term securities by selling shorter-term notes and using those funds to purchase longer-dated Treasuries.
The Fed said economic growth remains slow, and recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.
The Dow Jones industrial average <.DJI> dropped 106.26 points, or 0.93 percent, to 11,302.40. The Standard & Poor's 500 Index <.SPX> fell 14.32 points, or 1.19 percent, to 1,187.77. The Nasdaq Composite Index <.IXIC> slipped 4.54 points, or 0.18 percent, to 2,585.70.
The Dow Jones Transportation Average <.DJT>, seen as a proxy for economic health, fell 3.2 percent. Railroad Norfolk Southern Corp
In contrast, the tech sector remained a bright spot.
Oracle surged 6.8 percent to $30.28 a day after forecasting higher-than-expected earnings for the current quarter as well as robust sales. Earlier, Oracle climbed to $30.96, nearly an 8-week high.
Adobe rose 4.7 percent to $25.80 after forecasting fourth-quarter sales above estimates.
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)